CF Benchmarks Unveils ETH Staking Reward Rate for Investors

Key Insights:

  • CF Benchmarks launches ETH_SRR, offering a precise, daily measure for Ethereum staking rewards, enhancing investment decisions in PoS blockchain.
  • ETH_SRR addresses accuracy in Ethereum rewards, avoiding ‘slashed’ data and DeFi pitfalls and ensuring reliable benchmarks for institutional investors.
  • Backed by SSPs like Kiln and Staked, ETH_SRR sets a new standard in transparent, regulated PoS protocol evaluation, guiding crypto market integrity.

In a pivotal development for Ethereum enthusiasts and investors, CF Benchmarks has introduced the CF ETH Staking Reward Rate (ETH_SRR). This benchmark, a first in the CF Staking Series, aims to offer a precise measure of the economic incentives involved in staking on the Ethereum blockchain, which operates on a Proof of Stake (PoS) protocol.

A Solution for Measuring Ethereum Staking Rewards

The introduction of the ETH_SRR comes in response to the growing need for a reliable and daily realized Ethereum staking reward rate. Ethereum staking, integral to the blockchain’s security and efficiency, generates rewards from several sources. These include the consensus layer, encompassing block, and attestation rewards. The execution layer includes transaction fees and Maximal Extractable Value (MEV). However, these rewards are not without associated risks, such as the penalties known as ‘slashing’ for validators who violate blockchain rules.

With Ethereum dominating 79% of PoS protocols in the third quarter of 2023 and maintaining a steady market share in the crypto asset sphere, institutional interest in ETH is unmistakable. This rising interest, however, brings forth challenges, particularly concerning the reliability and accuracy of third-party data.

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The ETH_SRR employs a multi-contributor methodology to address these challenges, leveraging data from institutional-grade Staking Service Providers (SSPs). This approach enhances market representation and mitigates the risks of single-source data dependency.

Furthermore, the ETH_SRR avoids the issues often encountered with gross network reward rates. It carefully excludes data from ‘slashed’ contributors, ensuring a more accurate and representative benchmark. Additionally, the benchmark circumvents the risks associated with Decentralized Finance (DeFi) protocols, which can expose stakeholders to bugs, exploits, and non-compliance with KYC/AML regulations.

Ensuring Transparency and Accuracy in Staking Rewards

To maintain market integrity, CF Benchmarks adheres to rigorous standards for selecting professional validators. Validators that consistently meet these high standards are included, ensuring the benchmark’s transparency and accuracy. Those failing to meet the criteria consistently are excluded, reinforcing the reliability of the ETH_SRR.

Regulated under the UK Benchmarks Regulation (BMR) framework and aligning with the EU BMR, the ETH_SRR is designed with replicability, representativeness, and resistance to manipulation in mind. This positions it as a crucial tool for financial product providers engaged in non-custodial staking on the Ethereum blockchain.

The CF ETH Staking Reward Rate launches with four initial SSP contributors: Kiln, Staked, Figment, and Blockdaemon. These contributors represent about 145,000 validators and approximately 16.5% of the total staked ETH capitalization.

Moreover, CF Benchmarks’ collaboration with CME Group Inc (NASDAQ: CME) in August to launch Bitcoin (BTC) and ETH reference rates further highlights their commitment to providing transparent and regulated evaluation of PoS protocols.

The introduction of the CF ETH Staking Reward Rate meets the market demand for a reliable benchmark. It sets a new standard for transparent and regulated evaluation of PoS protocols. It represents a critical advancement in offering institutional-grade benchmarks in the ever-evolving cryptocurrency staking landscape.